ITO, Kumbakonam V. Smt. G.Thamaraiselvi, Kumbakonam

ITA 29/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64166 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-09-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 10-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K E B RANGAR AJAN JR
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained investment; Valuation report
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ------- ITA NO.29/MDS/2011 ASSESSMENT YEAR : 2001-02 THE INCOME TAX OFFICER, WARD-I(1), KUMBAKONAM. V. SMT. G. THAMARAISELVI, 11, SARANGAPANI SANNIDHI, KUMBAKONAM. (PAN : ABRPM0955E) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.E.B. RANGARAJAN, JR. STANDING COUNSEL RESPONDENT BY : SHRI S. SRIDHAR DATE OF HEARING : 05.0 9.2012 DATE OF PRONOUNCEMENT : 05.09.201 2 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE CIT(APPEALS),TIRUCHIRAPALLI DATED 19-10-2010 FOR THE ASSESSMENT YEAR 2001-02. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN I NDIVIDUAL RUNNING A MARRIAGE HALL NAMED SRI DURGA MALIGAI I N ITA 29/MDS/2011 2 PAPANASAM. THE ASSESSEE HAD FILED A RETURN OF INCO ME DECLARING TOTAL INCOME OF ` 1,85,460/-. THE RETURN WAS PROCESSED INITIALLY UNDER SECTION 143(1) OF THE INC OME TAX ACT, 1961 ('THE ACT' FOR SHORT) AND SUBSEQUENTLY NOTICE UNDER SECTION 143(2) WAS ISSUED AND ASSESSMENT WAS COMPLETED AFTE R FOLLOWING DUE PROCESS UNDER SEC. 143(3) READ WITH S ECTION 147 OF THE ACT. THE ASSESSING OFFICER REFERRED THE KALYANAMANDAPAM TO THE VALUATION CELL OF THE I.T. D EPARTMENT ON 5-6-2008. SINCE THE VALUATION CELL HAD NOT VISI TED THE BUILDING TILL 8-12-2008, THE INSPECTOR OF HIS OFFIC E WAS DIRECTED TO INSPECT THE KALYANAMANDAPAM AT PAPANASAM AND FIX THE VALUE AS ON 31-03-2001 CONSIDERING THE FACT THAT TH E ASSESSMENT WAS TO BE COMPLETED ON OR BEFORE 31-12-2 008. ACCORDINGLY, THE INSPECTOR VISITED THE PREMISES AND FIXED THE COST OF CONSTRUCTION EXCLUDING THE COST OF LAND AT ` 66,79,987/-. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED A NOTICE TO THE ASSESSEE ON 10-12-2008 CALLING FOR OBJECTIONS IF AN Y FOR ADOPTING THE ABOVE VALUE IN RESPECT OF THE MARRIAGE HALL AS ON 31.3.2001. IN RESPONSE TO THE ABOVE, THE ASSESSEE S CA APPEARED BEFORE THE ASSESSING OFFICER ON 15-12-2008 AND FILED A LETTER STATING THAT THE REGISTERED VALUER, ER. PO NKUMAR HAS ITA 29/MDS/2011 3 INADVERTENTLY TAKEN THE DATE OF INAUGURATION AS DAT E OF COMPLETION WHEREAS THE CONSTRUCTION WAS ACTUALLY CO MPLETED IN THE FINANCIAL YEAR 2001-02. IT WAS FURTHER STATED THAT 50% OF THE CONSTRUCTION WORK WAS DONE DURING THE FINANCIAL YEAR 1999- 2000 AND HENCE THE RATE TO BE ADOPTED IS ` 441/- APPLICABLE TO THAT YEAR AND NOT ` 469/- AS ADOPTED BY THE DEPARTMENT AND IF THE ABOVE RATE OF ` 441/- IS ADOPTED FOR 50% OF WORK AND SELF SUPERVISION CHARGES ARE ALLOWED, THE VALUE OF ` 65,00,000/- ADMITTED BY THE ASSESSEE AS ON 31.3.2002 WOULD BE F AIR. THE ASSESSING OFFICER AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE ACCEPTED THE COST OF CONSTRUCTION AT ` 65 LAKHS BUT ACCORDING TO THE ASSESSING OFFICER THE CONSTRUCTION WAS COMPLETED IN THE ASSESSMENT YEAR 2001-02. THE COST OF CONSTRUCTION FOR THE ASSESSMENT YEAR 2001-02 WAS WO RKED AT ` 45,72,420/- I.E. ` 65,00,000 ` 45,72.420 = ` 19,27,580/-, WHICH WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE . WITH REGARD TO THE CONTENTION OF THE ASSESSEE THAT THE R EGISTERED VALUER HAS INADVERTENTLY TOOK THE DATE OF COMPLETIO N OF CONSTRUCTION, THE ASSESSING OFFICER OBSERVED THAT T HE SAME WAS NOT ACCEPTABLE. ACCORDING TO HIM, TAXES LEVIED BY THE LOCAL ITA 29/MDS/2011 4 AUTHORITIES PROVED THAT THE BUILDING WAS COMPLETED BEFORE 31- 03-2001. ACCORDINGLY, THE ASSESSMENT WAS COMPLETED. 3. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER BEFORE THE CIT(A). IT WAS SUBMITTED BEFORE THE LEA RNED CIT(APPEALS) THAT THE REGISTERED VALUER WHO HAD INS PECTED THE BUILDING ON 25.2.2003 HAS INADVERTENTLY TAKEN T HE DATE OF INAUGURATION OF THE KALYANANAMANDAPAM AS THE DATE O F COMPLETION OF THE CONSTRUCTION BY MISTAKE AND BY WH ICH TIME MAJOR WORKS WERE COMPLETED TO THE TUNE OF ` 45,72,420/-. THE REMAINING WORKS AND THE BALANCE OF PAYMENTS DUE TO CREDITORS FOR PURCHASE OF MATERIALS WERE INCURRED D URING THE SUBSEQUENT PERIOD TO THE TUNE OF ` 19,27,580/-. ACTUALLY, THE CONSTRUCTION WAS COMPLETED ON 31.3.2002 AT THE COST OF ` 65 LAKHS. THE LEARNED CIT(APPEALS) AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE HELD THAT, IT IS TRUE THAT THE ASSESSING OFFICER HAS NO OTH ER MATERIAL BEFORE HIM TO COME TO THE PRIMA FACIE CONCLUSION THAT THE APPELLANT HAD COMPLETED THE CONSTRUCTION IN THE PREVIOUS YEAR ENDED 31.3.2001 ITSELF APART FROM A CLAUSE IN THE VALUATION REPORT WHICH THE APPELLANT ALLEGED THAT IT WAS BY MISTAKE. THE REPORT OF THE INSPECTOR WAS ALSO SILENT ABOUT THE DATE OF ITA 29/MDS/2011 5 COMPLETION. NOR THE ASSESSING OFFICER HAS MADE ANY ENQUIRY WITH THE REGISTERED VALUER. FURTHER, THE ADDITION OF ` 19,27,580/- CANT BE ASSESSED IN ONE YEAR WHEN THE CONSTRUCTION AS TAKEN BY THE ASSESSING OFFICER COVERS TWO FINANCIAL YEARS. ACCORDINGLY, THE LEARNED CIT(APPEALS) DELETED THE A DDITION MADE BY THE ASSESSING OFFICER. 4. ON BEING AGGRIEVED, THE REVENUE HAS CARRIED THE MATTER BEFORE THE TRIBUNAL. THE LEARNED JR. STANDING COUN SEL HAS SUBMITTED THAT THE ASSESSING OFFICER DIRECTED THE I NSPECTOR TO VISIT THE PLACE. THEREAFTER HE HAS ADOPTED THE COS T OF CONSTRUCTION TAKING THE DATE OF COMPLETION AS 31.3. 2001. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER, BY TA KING INTO CONSIDERATION THE TAXES LEVIED BY THE LOCAL AUTHORI TIES AND ALSO ELECTRICITY CHARGES PAID BY THE ASSESSEE, CAME TO T HE CONCLUSION THAT THE CONSTRUCTION OF THE BUILDING WA S COMPLETED ON 31.3.2001. HE FURTHER SUBMITTED THAT THE COST O F CONSTRUCTION OF THE KALYANAMANDAPAM WAS AT ` 45,72,420/- AND THE REMAINING 19,27,580/- WAS RIGHTLY ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE TOTAL COST OF CONSTRUCTION INCUR RED BY THE ITA 29/MDS/2011 6 ASSESSEE WAS ` 65 LAKHS AND THE CONSTRUCTION WAS COMPLETED ON 31.3.2002. THE ASSESSING OFFICER WRONGLY ADDED ` 19,27,580/- AS UNEXPLAINED INVESTMENT, BEING THE DI FFERENCE BETWEEN THE TOTAL COST ADMITTED FOR THE PERIOD OF 3 1.03.2001 AT ` 45,72,420/-. HE STRONGLY SUBMITTED THAT THE CONST RUCTION OF THE BUILDING WAS COMPLETED ONLY ON 31.3.2002 AND NOT ON 31.3.2001. SIMPLY BECAUSE THE INAUGURATION WAS DON E BY THE ASSESSEE, IT DOES NOT MEAN THAT THE ENTIRE WORK WAS COMPLETED. 6. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY POINT FOR CONSIDERATION IN THIS APPEAL IS WHETHER T HE ASSESSEE HAS COMPLETED THE CONSTRUCTION OF THE KALYANAMANDAP AM AS ON 31.3.2001 OR 31.3.2002. THE ASSESSING OFFICER R ELYING ON THE INSPECTORS REPORT AND ALSO THE TAX RECEIPTS OF LOCAL AUTHORITIES CAME TO THE CONCLUSION THAT THE CONSTRU CTION OF THE KALYANAMANDAPAM WAS COMPLETED AS ON 31.3.2001. THE LEARNED JR. STANDING COUNSEL SUBMITTED THAT THE ASS ESSEE HAD PAID SERVICE TAX IN FORM ST.3 IN THE MONTH OF SEPTE MBER, 2000. SO ONCE THE ASSESSEE PAID THE SERVICE TAX, O BVIOUSLY HE MUST HAVE COMPLETED THE CONSTRUCTION AND STARTED US ING THE ITA 29/MDS/2011 7 KALYANAMANDAPAM. THEREFORE, THE ARGUMENT OF THE LE ARNED COUNSEL FOR THE ASSESSEE HAS NO BASIS THAT THE ASSE SSEE CONTINUED THE CONSTRUCTION EVEN BEYOND 31.03.2001. THE LEARNED CIT(APPEALS) WITHOUT CONSIDERING THE CRUCIA L ASPECT OF THE MATTER, I.E. PAYMENT OF SERVICE TAX FOR THE MON TH OF SEPTEMBER, 2000 VIDE FORM NO. ST-3 C. EX. REGISTRAT ION NO. 23/2001/ST/KMG/MKS. CODE NO. 3074032750, SIMPLY ALL OWED THE ASSESSEES APPEAL. WE, THEREFORE, TAKING INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES OF THE CA SE AND ALSO FORM NO. ST-3, REFERRED TO ABOVE, REVERSE THE ORDER PASSED BY THE LEARNED CIT(APPEALS) AND RESTORE THE ORDER PASS ED BY THE ASSESSING OFFICER. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON THURSDAY, THE 5 TH DAY OF SEPTEMBER, 2012, AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ( V.DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 05 TH SEPTEMBER, 2012. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE